Volkswagen intends to freeze salaries for its roughly 660,000 employees worldwide until 2030, according to the company’s Global Works Council. The plan, first reported by the German newspaper Süddeutsche Zeitung citing internal documents, was confirmed by the works council on Monday after it received information about directives from the executive board.

Under the guidelines, personnel managers worldwide have been instructed to implement “zero rounds” through 2030—freezing pay at current levels and suspending any increases. The measures are said to have taken effect at the start of October and form part of broader new global management rules for the fourth quarter. These also reportedly include reductions in variable pay, special payments, benefits, and jobs.

Volkswagen declined to comment on what it described as speculation. A spokesperson said any proposals on labor costs would be discussed in a new round of talks scheduled for later this week.

The works council rejected the approach as “absurd” and predicted strong resistance to what it called a “rather unrealistic” plan. Germany’s powerful metalworkers’ union, IG Metall, reinforced that stance. A spokesperson said pay developments at Volkswagen are decided at the negotiating table, “not by decree from the executive boardroom.”

The proposal comes amid strained relations between management and labor representatives. CEO Oliver Blume is advancing what is described as the most radical restructuring in the German automaker’s history as the company navigates the costly shift to electric vehicles, weaker demand in key markets, and intense competition from Chinese manufacturers.

According to the Süddeutsche Zeitung, the absence of pay rises could reduce real income by around 10% for affected workers by the end of the decade because of inflation. The freeze would mark a departure from Volkswagen’s previous practice of budgeting for inflation adjustments and room for local negotiations.

In Germany, where Volkswagen employs about 275,000 people, roughly 130,000 fall under the company’s house collective agreement. Workers at subsidiaries Audi, Porsche, and MAN are covered by the industry-wide IG Metall agreement. The salary freeze is therefore expected to become a central issue in ongoing tariff negotiations.

The plan underscores the pressure on European automakers to cut costs as they invest heavily in electrification while facing sluggish sales and margin erosion. Labor representatives have signaled they will fight any attempt to impose the freeze unilaterally, setting the stage for potentially contentious talks in the coming weeks.